Advanced charting and technical studies

As we mentioned in our Introduction to Charting and Introduction to Studies article, technical analysis involves evaluating your investment choices by analyzing trends and patterns seen in price charts.

In addition to our existing suite of research tools, Questrade offers extra tools for technical analysis on our advanced trader platforms.

Here’s more about what the tools are and where to find them.

Questrade Edge Web - Intraday Trader

If your preferred platform is Questrade Edge Web, our Intraday Trader tool (powered by Trading Central) offers a wide range of technical analysis patterns and studies that can help fulfil your research needs.

Intraday Trader monitors Canadian and U.S. equities on the TSX, TSX Venture, NYSE, NASDAQ, AMEX and ARCA exchanges. It scans price charts in real-time to detect technical events, including classic patterns, candlestick and bar patterns, moving averages, and technical oscillators. You can easily set them up and apply them to the index or watchlist of your choosing.

What charting options are available on Edge Desktop?

There are 3 main types of price charts offered on Edge Desktop:

Now that we've seen the different chart types, here are the studies available on our trading platform.

What studies are available in Edge Desktop?

Studies can be a key tool for individuals who use technical analysis as part of their stock investing strategy.

As with charting, the vast majority of our studies are available on our desktop platform, Edge. If you open a chart, you can either right-click the chart and select Add study, or click Studies on the chart itself and select the specific study that you want.

Here’s a list of the available studies and what they show (listed alphabetically).

Average directional movement index rating

The average directional movement index rating quantifies momentum change in the average direction index (ADX). It is calculated by adding two values of ADX (the current value and a value n periods back), then dividing by two.

This additional smoothing makes the ADX rating slightly less responsive than ADX. The interpretation is the same as ADX; the higher the value, the stronger the trend.

Average true range

The average true range is used to determine the commitment or enthusiasm of traders. Large or increasing ranges suggest that traders are prepared to continue to bid up or sell down a stock through the current course. Decreasing range suggests waning interest.

Bollinger %B

This is a technical study derived from Bollinger bands. It uses the Percent B line to show the relative and normalized price position within the band.

%B = (price - lower band) / (upper band - lower band)

Bollinger bands

Bollinger bands use standard deviation and a simple moving average to help traders determine buy and sell points, or to help confirm other patterns. A price chart that uses Bollinger bands displays price, the upper and lower Bollinger bands, and the moving average. The upper and lower Bollinger bands typically appear 2 standard deviations above and below the 20-period moving average respectively. 

The purpose of Bollinger bands is to provide an indication of high and low price range. By definition, prices will be high at the upper band and low at the lower band. Price tends to bounce between the upper and lower Bollinger bands, but touches or penetrations can be tradable. The expansion or contraction of the band's width around the moving average indicates periods of high or low volatility respectively.

Bollinger bandwidth

The Bollinger bandwidth is used to measure the volatility of the market. This study is derived from Bollinger bands; however, it is represented as a standalone study. It is constructed as the distance between the upper and lower bands of the Bollinger bands normalized by the middle band.

Commodity channel index

Used to determine overbought and oversold levels by measuring the relation between price and a moving average, or normal deviations from that average.

Directional movement indicator

The direction movement indicator is used to determine the strength of the directional movement (trend).

Keltner channels

Keltner channels are technical analysis indicators showing a central moving average line plus channel lines at a distance above and below.

Moving average convergence/divergence (MACD) with histogram

A calculation of the difference between two moving averages of different periods that shows potential overbought/oversold phases of market fluctuation.

Momentum

Momentum is a simple technical analysis indicator showing the difference between the current closing price and the closing price N price periods ago.

Moving average

The moving average is one of the most useful technical analysis tools. It shows the average value of price over a certain number of time periods. The moving average makes it easier to spot trends by smoothing out price fluctuations or noise that can confuse interpretation.

Moving average bands

The moving average band can be used to measure the top or bottom of the price relative to previous trades, and consists of three lines: middle band, upper band, and lower band.

These lines are usually plotted in the main data pane over the price action to provide a relative definition of high and low. Prices are treated as high at the upper band and low at the lower band. Prices moving closer to the upper band indicate an overbought market. If the price is closer to the lower band, it indicates an oversold market.

Moving average TR

The moving average TR is calculated much like the Bollinger bands indicator, except the true range is used instead of the standard deviation.

Negative direction indicator

The negative directional indicator (DI - ) is used to determine the strength of the downward or negative directional movement (trend). DI -  rates the trend of a stock on a scale of 0-100.

Generally speaking, the higher the value of DI -, the more a stock is trending and the more it is a candidate for a trend following system. DI - is one of the components of the directional movement index (DMI). In some cases, DI -  is used without other components of DMI, which is why it is represented as a standalone study.

On balance volume

The on-balance volume (OBV) is a technical analysis indicator intended to relate price and volume in the stock market. Total volume for each day is assigned a positive or negative value depending on prices being higher or lower that day.

A higher close results in that day’s volume getting a positive value, while a lower close results in a negative value. When prices go up, the OBV should rise as well, and when prices make a new rally high, this is known as a negative divergence, suggesting a weak move.

Parabolic SAR studies

Parabolic SAR (Parabolic Stop and Reverse) is a method to find potential reversals in the market price direction of traded goods, such as securities or currency exchanges. It is a trend-following (lagging) indicator and may be used to set a trailing stop loss, or determine entry or exit points based on prices that tend to stay within a parabolic curve during a strong trend.

Pivot points

A pivot point is a price level of significance in technical analysis. The pivot point is the average of the intraday high and low, and the closing price from the previous trading day.

Trading above the pivot point is often thought to indicate bullish (positive) sentiment, while trading below the pivot point is often thought to indicate bearish (negative) sentiment.

Positive directional indicator

A positive directional indicator (DI+) is used to determine the strength of the upward or positive directional movement (trend). DI+ rates the trend of a stock on a scale of 0-100.

Generally speaking, the higher the value of DI+, the more a stock is trending and the more it is a candidate for a trend-following system. DI+ is one of the components of the direction movement index (DMI). In some cases, DI+ is used without other components of DMI, which is why it is represented as a standalone study.

Rate of change

The rate of change (ROC), which is similar to momentum, is a simple technical analysis indicator that shows the relative difference between the last closing price and the closing price “N” price periods ago.

Relative strength index

The relative strength index (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset.

RSI consists of one line that ranges from 0 to 100. An asset is deemed to be overbought once the RSI crosses above the 70 level, meaning that it may be overvalued and is a good candidate for a pullback. Likewise, if the RSI falls below 30, it is an indication that the asset may be oversold and therefore likely to rally.

Stochastic fast

The stochastic oscillator is a momentum indicator that shows the location of the close relative to the high-low range over a set number of periods. The fast stochastic oscillator is based on original formulas for %K and %D.

%K = (current close - lowest low) / (highest high - lowest low) x 100

%D = 3-day SMA (simple moving average) of %K

Lowest low is the lowest price during the viewing period

Highest high is the highest price during the viewing period

Stochastic slow

The stochastic oscillator is a momentum indicator that shows the location of the close relative to the high-low range over a set number of periods. The slow stochastic oscillator smoothes %K of the stochastic fast with a SMA (simple moving average).

%K = (current close - lowest low) / (highest high - lowest low) x 100

Lowest low is the lowest price during the viewing period

Highest high is the highest price during the viewing period

TRIX

TRIX is an oscillator used to identify overbought and oversold markets. This displays the percentage rate-of-change of a triple exponentially-smoothed moving average of a security's closing price in order to eliminate price movements that are insignificant in comparison to the larger trends

A rising or falling line is an uptrend or downtrend and TRIX shows the slope of that line -- positive for a steady uptrend, negative for a downtrend, and when crossing through zero is a trend-change (i.e. a peak or through in the underlying average).

Volume

Shows the trading volume for a given instrument in a selected price period.

Additional tools available via API

If the tools available through our platforms aren’t enough, we’ve still got more for you.

Questrade offers a secure API to connect industry-leading tools such as VectorVest and Medved Trader to your account without ever exposing your login information.

To learn more about Questrade’s API and the partners we work with, check out our API Centre.